Zen Technologies (533339) Q1 25/26 earnings summary

Executive summary

• Q1 FY 2026 performance was mixed, with some reports indicating revenue and profit declines due to deferred execution and others showing strong year-over-year growth, supported by robust demand in the Defence and Homeland sector.

• Subsidiaries ARI and UTS contributed strongly, with ARI expected to add INR 170 crore and UTS INR 80 crore to the top line this year; integration of subsidiaries and strategic acquisitions, including a 76% stake in TISA Aerospace, are expanding capabilities in UAVs and loitering munitions.

• The company maintains a debt-free balance sheet, high liquidity of ₹918 crore as of June 30, 2025, and a consolidated order book of ₹754.56 crore, supporting long-term growth targets of INR 6,000 crore over the next three years.

• Operational discipline and cost efficiency preserved strong EBITDA and PAT margins, with consolidated PAT margin stable at 30% year-over-year.

• Strategic focus on AI integration, expansion into kamikaze drones, and commercialization of new technologies are expected to drive future growth.

Financial highlights

• Consolidated Q1 FY 2026 revenue was INR 158 crore (₹15,821.87 lakhs to ₹25,461.57 lakhs reported), with standalone revenue at INR 111 crore; consolidated operational EBITDA was INR 64.70 crore (40.90% margin), and consolidated PAT was INR 47.75 crore.

• Standalone operational EBITDA fell to INR 38.05 crore (34.26% margin), and standalone PAT was INR 37.12 crore, with PAT margin improving to 33.44% year-over-year.

• Basic and diluted EPS for Q1 FY 2026 were ₹8.88, compared to ₹4.13 in the prior year quarter.

• R&D expenses remained stable at ₹6.97 crore in Q1 FY 2026.

• Paid-up equity share capital stood at ₹902.90 lakhs as of June 30, 2025.

Outlook and guidance

• FY 2026 is expected to be muted, with growth dependent on order book by end of Q2; cumulative revenue target of INR 6,000 crore over the next three years.

• Confident in achieving H1 FY 2026 order inflow guidance of ₹800 crore, with ₹150 crore secured and ₹650 crore expected, especially in simulators and anti-drone systems.

• H2 is expected to see a pickup in order inflow, especially for anti-drone systems and exports, with FY 2027 and FY 2028 projected as strong growth years.